Youth Exclusion in Iran: The State of Education, Employment and Family Formation

Djavad Salehi-Isfahani and Daniel Egel September 2007Using conceptual frameworks relating to social exclusion literature and life transitions, the inclusion of youth and their successful transition to adulthood is analyzed in this paper by looking at three dimensions: acquiring skills for productive employment, finding a job and setting up a family. With output and consumption growing at about 5 percent a year for over a decade, the Iranian economy today seems quite robust overall. Investment levels remain quite high and the road, electricity, water and natural gas infrastructures are well maintained. But the legal and institutional infrastructure remains underdeveloped. Much needed legal reform to deal with the requirements of a modern contractual economy has been overshadowed in recent years by political skirmishes over other aspects of legal improvements, including reform of the penal code and laws governing the freedom of the press. Property rights and the incentives for long-term private investment have been undermined by corruption and an unfavorable business environment. Amidst this macro-economic setting, a demographic burst, caused by high fertility rates in the late 1970s and early 1980s, has created new choices and challenges for today’s youth in Iran. Traditional Iranian society offered a smoother and more predictable transition from youth to adulthood. But with the gradual disappearance of traditional society and rapid social and economic change, predictable transitions from youth to adulthood have given way to uncertainty and unpredictability. The unusually large cohort of youth today has led to overcrowding in schools, gender imbalance in the marriage market and increased pressure on Iran’s rigid formal labor market. Iran can take better advantage of this demographic dividend by turning the increased investment in the health and education of this youth cohort into higher productivity and economic growth by providing it with better opportunities for learning and employment.